Read next

On Monday a group of colleagues returned from Budapest, armed with tales of tasty sweets and tantalisingly cheap real estate in the city centre. My colleague Andrew also mentioned a somewhat distressing scene at the Hungarian capital’s airport.

“It was quite sad to see all those blue-nosed Malev planes lined up with nowhere to go,” he said. “It’s even more depressing that Ryanair looks set to become Hungary’s new national carrier.”

While airline collapses have become commonplace, with Spanair and Air Australia also going under over the past few weeks, the loss of national carriers is a less frequent phenomenon – in part because of the emotions wrapped up in seeing once-loved tailfins permanently parked, in part because a flag carrier is often considered a cornerstone for economic development. We’ve seen high-profile bankruptcies – Swissair in Switzerland and Sabena in Belgium immediately come to mind – but in both these cases the public and private sector worked hard to get their flags back on the fuselages of Boeings and Airbuses, albeit under slightly rejigged brands. Both are also good examples of why small countries need their own airlines: to stimulate trade, boost tourism and assert their sovereignty.

Conventional wisdom suggests that states have no business running airlines. Indeed, the past few decades have seen most major economies sell their flag carriers to other airline groups or list them on the local bourse – often keeping minority stakes for sentimental purposes. The results have been mixed at best.

While I’m all for a free and open market, I also believe there’s a need for governments to offer essential services to their citizens – particularly when the free market is unlikely to fill the gap. In the case of countries that have small populations, or lack strategic hubs, this also means underwriting the national airline. Consultants might argue that this is unnecessary, as other airlines will swoop in to soak up demand, but there’s considerably more at stake than just ensuring every flight boasts an 80 per cent load factor.

A national airline is an embassy with wings, transporting culture, sports teams, cuisine (some airlines do actually serve decent food when they stick to national dishes), commerce and goodwill around the world. Air New Zealand is a flying example of Kiwi resourcefulness and ingenuity, with clever cabin configurations on their long-haul fleet, an emphasis on New Zealand wines and reputable Kiwi chefs consulting on the menus. A flag carrier instills a sense of pride when its tail is spotted on the runway of a far-off land, when it brings home the winning team and when it flies out to evacuate citizens stranded in a conflict or disaster zone.

In an increasingly globalised world, smart governments recognise the importance of having their flags fluttering on as many routes as possible – a message that certainly hasn’t been lost on Singapore, whose government indirectly owns Singapore Airlines, or the emirs in Dubai who control Emirates. In both cases, these small states have made their airlines part of their national identity and growth strategy. Unsurprisingly, consultants who are against governments running airlines often leave Emirates and Singapore Airlines out of their presentations as they pretty much shatter the theory.

At the moment there’s talk in Finland of selling off state-backed Finnair – either in parts or the whole business. Having spent decades exploiting the fast travel times across the top of the world, Finnair may have carved out a unique position in international aviation. But it’s still a solution that is unlikely to be particularly attractive to outside investors. Is Lufthansa really going to invest in a hub on the far side of the Baltic? Ditto Air France-KLM or Qatar Airways.

As governments around the world continue to tighten their belts, they also have to remember there are some things you simply have to protect. Having an airline to call your own is useful for getting your citizens around the world and bringing in visitors to invest and marvel at your achievements – just as it’s important to maintain respectable-looking embassies rather than getting your diplomats to work on iPads in the lobbies of Novotels.

I wonder what will happen the next time a group of Hungarian tourists need to be airlifted out of a sunny banana republic that’s just seen its government implode; will Budapest have to put a call through to the offices of Ryanair in Dublin to organise an evacuation? Or will they have to go and book online? And what happens if Finland wins the World Cup (small chance I know) and the team needs to fly home for a heroes’ welcome? How will it look to Finns and the rest of the world when their team steps out of an aircraft belonging to Norwegian Air Shuttle? So much for national pride or dignity on the world stage, or any sense of sovereignty.